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Pearlstein

Health Care Quality and Costs

Steven Pearlstein
Washington Post Columnist
Wednesday, February 2, 2005; 11:00 AM

Washington Post business columnist Steven Pearlstein was online to discuss his latest column, which examines ways to improve quality and control costs in the health care system. He also looks at the difficulty in getting the doctors and hospitals to change their ways.

A transcript follows.



About Pearlstein

Steven Pearlstein writes about business and the economy for The Washington Post. His columns on the economy appear every Wednesday and Friday.

Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.

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Gaithersburg, Md.: Great emphasis has been placed on controlling the costs at the provider level: Doctors, Hospitals, and Clinics. Why has so little effort been made at controlling the intermediate cost of insurance companies and pharmaceuticals.

Steven Pearlstein: Well, let's take that in two parts.

First, insurance company costs. These vary widely, but as a rough approximation, let's say they represent 10-12 percent of the cost of a health insurance premium. Maybe that's too high, and we could get it down to 7-8 percent. But that's a one time gain. It is not a big factor in the annual increases. Also, I suspect that we actually want the intermediary -- the insurer, health plan, Medicare, etc-- to be doing more work rather than less in terms of providing the infrastructure to evaluate the performance on providers on cost and quality and transmit information to doc about best practices and come up with more complicated pay for performance schemes. The health plans know they blew it with managed care when they turned it into an exercise of squeezing providers income saving pennies in the short run. They now realize that people won't respond to their directions and incentives if they are perceived as caring only about cost and not quality. They've learned their lesson and are willing to be the agents of reform. That is not true of the docs yet.

As to the drug companies, they remain a big problem, but at this point drugs are still not the big cost driver overall, despite big annual percentage increases. The bad old health plans are doing a good job of negotiating lower prices and driving people to generics, although there is more work to be done on that. But I'm afraid the drug companies have responded to that by raising the price of the few drugs that have no competition or equivalent that health plans have no choice but to accept. This is a problem needing another, separate column to deal with.

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Middletown, Md.: I backpacked last year with two MDs (a general surgeon from AL and a gastroenterologist from MT) who commented that a 2:1 tax break for MDs would be a preferable solution for malpractice insurance. Is this feasible/reasonable?

Steven Pearlstein: Look, some of these insurance rates are unacceptable and we have to deal with them. But the solution isn't just to protect the docs and their insurers from big judgments. It is to give them scientific protocols that they can use as an absolute defense in malpractice cases. It is to make sure the regulators are more aggressive in dealing with chronic offenders. Regulation by lawsuit can be inefficient and have bad unintended consequences. But the solution isn't no regulation. It's better regulation.

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Denver: Steven:

Most of the healthcare agenda being pushed by the president seems to appeal to his conservative base (health savings accounts, medical malpractice reform, other market-based reforms, etc.). My guess is that the Bush administration calculates that a few minor fixes that appeal to the Republican base are more politically beneficial than tackling the larger problem in a significant way. It might not do much for our health care system, but it sure seems to be the smartest political strategy. Do you agree?

Steven Pearlstein: I suspect that is the White House view, cynically expressed. That's the reason they ignored the issue of the uninsured for the first four years. Never heard a peep from them about that. Why? The uninsured don't vote, or will never vote Republican, while seniors do, so let's give them a drug benefit. But you must understand that Mark McClellan, who runs Medicare/Medicaid, knows exactly what needs to be done, and is the one guy in America that can make it happen. If he adopts pay for performance, everyone else will. If he sets a deadline and provides money for computerized medical records, it will happen. He's very slowly moving in the right direction. But he's hamstrung politically: he can use carrots to try to get people do the right thing and launch pilot programs, but he won't use sticks. He just won't level with the various provider constituencies and patients and tell them some of the harsh truths they need to know and say, "Look, we want to work with you to design a better system and give you time and even money to get there, but we can't keep doing things the way we're doing it now. You'll have to make sacrifices and you'll have to adjust to the new realities. And we won't let the perfect be the enemy of the good. We need to start and we need to start NOW." He needs to put more stakes in the ground.

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Kennesaw, Ga.: Good morning, Mr. Pearlstein. Presumably your criticism of doctors' resistance to change applies also to their reluctance to hold other doctors to account for malpractice. I wouldn't argue with anyone who said this needed to change -- but I fear this contention could easily become an excuse for inaction on reforming torts as they apply to medicine. In individual specialties (though not perhaps throughout the whole field of health care) the threat of being sued has driven up costs for patients and prompted qualified doctors to leave, all without reducing actual malpractice as well.

I see scant prospect of building political support for the changes you recommend if they are seen merely as an effort to get lawyers off the hook by placing all the blame for problems in the health care system on doctors.

So, besides the things you recommend in your column today, what other reforms related to health care do you favor?

Steven Pearlstein: I think we need tort reform. Period. Now. But we also need better regulation of doctors to accompany that, to try to reduce medical errors before they happen and get the worst offenders out of the system in some other way than the malpractice route. There is general agreement on that. So let's just do it, see what happens, fix any unintended consequences and move along. This political tong war between the trial lawyers and the medical establishment is not in the public interest any longer.

As for other ideas, this is a big topic on which I have tons of opinions. But I try to spin them out one column at a time.

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A Modest Proposal: We MUST leave the Health Care situation as it is or, perhaps, make it worse. To do otherwise is to exacerbate the Social Security Crisis.

Steven Pearlstein: With all due respect, the Social Security crisis is child's play compared to health care. If you could take 20 percent of the cost out of a $1.7 trillion system and shave a percentage point off the cost growth rate, you'd have enough to fully fund Social Security as it is and still have money left over.

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Washington, D.C.: Mr. Pearlstein,

There will never be change, its too late. It should have been dealt with back in the Clinton days.

The doctors have too much of a life style and live way beyond their means to accept any kind of change.

It almost seems like health care will only be for the rich.

Why don't the words out of our Presidents mouth talk about future health care instead of Social Security?

Now, its all about the money.

Steven Pearlstein: Its never too late. In fact, its only now, with the technology we have, that we can really do things like risk adjustment and outcomes research and have software that let's docs know about drug interactions and best practices in real time. And, by the way, you may notice I didn't say anything about doctors incomes. In fact, if docs would embrace some of these ideas like computerized records and multigroup practices and adhering to best practice protocols, the result would be HIGHER incomes for doctors (although maybe fewer doctors than there would have otherwise been). That's what happens in every industry that goes through a reengineering process. Fewer but higher paid jobs. Its called the productivity cycle.

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Bethesda, Md.: If Doctors were paid based on outcomes, why would they continue to see patients that refused to lose weight, or smoked or were otherwise non-compliant?

Steven Pearlstein: Good question. First, we have to move to a system where patients who refuse to take care of their own health in ways that are useful will pay higher premiums. And second, you pay doctors for performance on the basis of what they do, not their patients. And there are ways to do that. Docs should be paid to remind patients that they didn't fill their prescriptions without penalizing them if the patient refuses. And we know that the very act of reminding them has positive results. Not perfect results, but positive results that save ALOT of money to the system.

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Washington, D.C.: How do insurance company profits help the delivery of health care in the USA?

Steven Pearlstein: Insurance company profits help the delivery of health care if health plans can be the "smart buyers" of services and drugs that individual consumers can't be. And if you want to add up the profits of all the health insurers and health plans in this country, it won't amount to but a fraction of $1.7 billion we spend on health care. This fixation on health insurers profits is ridiculous. Let's make sure the industry is competitive and let's give payers (businesses, consumers) the information they need to pick the best insurers on the basis of cost AND quality, and any "excess" profits will be wrung from the system. That's the way it works in other industries.

In this or any other industry, profits are the incentives necessary to keep a system competitive and encourage innovation.

Docs like to talk about insurance company profits, but how are insurer profits different than doctors profits?

Liberals pushing national health insurance also like to talk about insurer profits. To them I would say simply: forget about it. You may be right (although I don't think so) but you'll never win. Get over it. Its not useful to the debate at this point. You just make it easier for those opposing reform to stand their ground.

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Bethesda, Md.: Do have a doctor, and how long have you been seeing him or her? Do they ever give you advice you don't follow?

Steven Pearlstein: Yes, I have a great doctor and she often wants to do tests that I decide to take a pass on.

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Washington, D.C.: Were you aware that over 100,000 die each year because of medical errors? That's 400 plus per day. If an actual plane went down each day, we would throw money at the problem. How come doctors resist the use of technology to improve health hcare?

Steven Pearlstein: Yes I was aware. In fact, the Institute of Medicine's seminal report on health care quality a few years back really changed the tenor of this whole debate. Along with work by Jack Wenberg and his group up in Dartmouth, and the Rand Corp., and others, we now know that, at the margin, more spending not only doesn't deliver better care, it delivers worse outcomes. And that allows us to talk about reforms that, at the same time, improve quality and lower cost. And one area that this is obviously true is errors -- treatment that is given that is not cost effective, or medically effective, that has unintended bad consequences. And dealing with this is priority number one. How do we deal with it? By making sure that doctors know what the most recent evidence is about a particular treatment for a set of symptoms that present, in real time. There is too much new learning and breakthroughs going on for any doctor to keep up with it all. They need help. And technology is the obvious answer, if they will only accept it.

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Washington, D.C.: Isn't the real problem that Americans have different expectations of the health care system than Canadians or British people? We Americans all want to pay as little as possible when we are well, but have unlimited efforts made for us when we are sick.

Steven Pearlstein: That is a problem, and will increasingly be a problem going forward as new life-extending and life-enhancing technologies come on line. We need to ration care, as unpopular as it is to say that. And we can either use evidence based medicine to ration it rationally, or we can continue to kid ourselves that we are not rationing it while, in fact, rationing it on the basis of stupid things like who has more money or where we live or what med school our doctor was trained at or whether somebody has an employer who offers insurance.

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New York: Given the enormous growth in healthcare expenses (and the difficulty of competing with other industrialized nations as a result), do you think large employers with aging workforces, like GM or IBM, will at some point start agitating for a universal-payer type system?

Steven Pearlstein: I don't think so. They are agitating now for more cost efficient healths health systems that can improve outcomes nd put a damper on cost increases. They are, by and large, the good guys in this story. My only complaint with them is that they are not pushing their insurers and health plans hard enough to manage care better, even if it means cutting off certain doctors or hospitals that have high costs and poor outcomes. They need to cut these providers off and take the heat from their employees, and explain to them that only by getting tough will the inferior providers take the steps they need to improve things. A lot of what this whole thing is about is leadership.

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Northfield, Minn.: In addition to greed, MDs are influenced by the payors, the Rx companies, and the med tech sector. While clinical trials have demonstrated repeatedly that diet and exercise are better at controlling diabetes than any drug on the market, it is not promoted by this system. Why? There is no money to be made by the above entities.

Steven Pearlstein: That's right. And we need to reward doctors (and their nurses) for managing the health of their patients, not for doing expensive procedures and tests and interventions with low payoffs. That's how a good pay for performance system would work.

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Ann Arbor, Mich.: Mr. Pearlstein,

Last evening the ANN ARBOR NEWS declared that the Administration looks toward forcing all Americans to pay for his and her medical care. This was front-page news. I have a friend, recently diagnosed with throat cancer, who is prescribed $100 pills for nausea control. This is an out-of-pocket cost and he needs two a day during his chemo.

IF we Americans live within our budget, and our budget can't afford healthcare, then we'll simply suffer and die. Is this compassionate conservatism? Who will benefit from this HSA thinking? With gasoline over $2.10 a gallon here in the Midwest, WHAT can I possibly save into an HSA to afford my own healthcare?

Steven Pearlstein: If your friend had an HSA, he would have a catastrophic health insurance plan to go along with it and it wouldn't be a month or two before he had exhausted his HSA and triggered the insurance, which would pay for things from that point on. So while I don't think HSA's are the silver bullet and they do have downsides, your friend doesn't present the big problem with them.

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Rockville, Md.: Rather than "dragged kicking," what incentives can Dr. Bush give small providers to embrace new IT-based solutions for e-prescribing, etc ?

Steven Pearlstein: Great, let's provide the incentives, like only giving annual Medicare increases to providers who begin adopting the technology for computerized medical records according to the protocols set forth by Medicare. Those that don't get with the program, in contrast, would have their payments cut each year. And why not have the government offer interest-free loans up to a certain amount to any doc or group practice that wants to use the money to buy the technology. All that is good. But let's get going, and not expect the "market" do to this for us.

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Brookeville, Md.: Here's the reality of the situation: when you or your loved one show up in my Emergency Department with an urgent health care problem, you want me to fix it NOW! You don't care about the cost and you want me to try everything, even if I warn you there may not be a good outcome. I have been doing this for 10 years and this is the usual case. How can anyone ever fix that? Deny care based on outcome and cost statistics? And then when there is a bad outcome despite my best efforts which are up to date and use latest technology, do you then sue me? Come on! There's no way I want my kids to be doctors in the future.

Steven Pearlstein: Okay, you've defined the problem perfectly. No, if the patient or the family wants you to do stuff that isn't in the protocols and isn't in best practice, you say, "Your insurance won't cover this because the evidence is that's its not medically effective enough to be cost effective. If you want to pay for it yourself, I'll be glad to do it. But otherwise, I'm sorry to say this is not the way we are going to treat this." And yes, that ought to be an absolute defense against a lawsuit, and the lawsuit ought to first go to a state standards board that can certify that, indeed, you followed protocol, which would give a judge an objective reason to dismiss the case. And that's how the system should work. That's the way it works in countries with national health care. And by the way, they live longer than we do and have better health. So come on, doc, let's get with the program rather than throwing up your hands and saying it can't be done. We need YOUR leadership in telling patients the hard truths, rather than your blaming the bureaucrats or the insurance companies.

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Brookeville, Md.: Okay, I am an Emergency Physician. I disagree with your idea of paying docs based on good outcomes and costs. Say I am seeing an obese middle-aged male with high blood pressure and diabetes who smokes, and is having a heart attack. His risk of bad outcome is very high, and his cost of care will be very high either way. Do I tell him, sorry, you'll cost too much and likely die anyway, and I won't get paid for all my hard work and effort on your behalf? Truly, this is the medicine I practice--patients at risk of bad outcomes and unfortunately high cost. I am a salaried employee, and make no money no matter how many patients I see or how many tests or procedures I do.

Steven Pearlstein: I see you've written in twice, Dr. Brookville. So as I said to a previous correspondent, No, we don't penalize you for treating this badly behaving patients. We reward you for trying to do the best you can with the appropriate treatment, no matter whether he takes your advice. But we also expect you to tell the truth about his obstinance. And the insurer would be perfectly in his right to charge a higher premium.

Let me also say that this is the sort of argument against reform that docs always make -- the sort of bad cases that are used to justify doing nothing. As I said before, none of these reforms will be perfect and they will, from time to time, have bad consequences that we will have to deal with, or even live with. But they are better than the current system. Let's not let the perfect be the enemy of the good. We simply can't afford the current system, and the way care is currently rationed is immoral. And physicians, as a group, need to acknowledge that and participate in reforming the system rather than sitting back and taking pot shots at every idea.

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Washington, D.C.: I just became aware of this discussion. Just a few minutes ago, I wrapped up participating in a press briefing by the American College of Physicians, the nation's largest medical specialty society and second largest physician organization. (Disclaimer, I am the lead staff person for public policy for the ACP). We released a report on the state of the nation's health care system that recommends major changes in the way that doctors are reimbursed under Medicare, including linking payments at least in part to how well physicians do on clinical performance measures, incentives for use of electronic medical records to improve patient care, and payment for physician coordination and management of care of patients with chronic diseases. We'd be pleased to share our report, but my point is that some of us in medicine see the need for medical practice to change to support quality improvement, but we also see the need for the government to help physicians make the necessary changes by reforming its own dysfunctional payment policies.

Steven Pearlstein: Fabulous. Bravo. Congratulations. I am also aware that many of the other "colleges" are also very supportive of reform and are raring to go to begin designing the necessary medical protocols. But the problem isn't with the colleges. It is with the AMA and the docs themselves. The colleges, by their nature, are basically into certification and regulation.

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washingtonpost.com: Press Release: ACP Proposes Physician Payment Reforms and Technology Incentives to Improve Quality, Lower Health Care System Costs

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Washington, D.C.: Steven:

I look at the new forms of insurance arising--such as "consumer-directed" health plans--with more than a little trepidation.

While I applaud the introduction of market forces into the health care economy, it's silly to expect people to be able to shop around for the best health care value when it's difficult--or nigh impossible--to find the information on cost and quality we need to be able to enter the market as even modestly informed consumers.

So, what sources of information are there--outside of insurance commissioners' offices--that I can use to be a better health care consumer? (Note that I tend to prefer third-party sources of information; I'm looking for data, not marketing pieces.)

Thanks in advance!

Steven Pearlstein: There are lots of new sources of information on cost and quality being put on web sites by Medicare, state health agencies, large insurers and even regional consortia. More every day. That's the good news.

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Brookeville, Md.: You make the same mistake that most in the media do--you paint all doctors as unwilling to change, and only concerned with money. You are not around the physicians I have worked with for the past decade!! Most of us continuously update our medical information, use new technology in our practices, and have always been committed to providing the best medical care to our patients. Why do you and others insist on making us all look bad? Don't you think that perpetuates problems? I sure do, and I am tired of hearing how "bad" I am.

Steven Pearlstein: Ah, Dr. Brookville again. I do not think docs are only concerned with money. I think they are primarily motivated by what they think is best for their patients. The problem is they don't know what they don't know. And they are insensitive to cost-benefit and efficiency issues. As to how I know that they are unwilling to change, I think that's rather obvious. They haven't. And when you talk to the people who are pushing these reforms, as I have, they invariably talk about physician resistance as the Number One reason. That's what my research shows. What about yours.

Nobody is saying docs are bad. I am saying they are nd pig-headed and put too much value on their own experience (versus data), their own autonomy and independence (rather than effectiveness and efficiency of the whole system) and their own disinclination to change how they go about their business every day, which is very human but, at this point, not affordable to the rest of us who don't make as much as you guys.

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Washington D.C.: To be clear, the American College of Physicians is not a medical college, but a professional membership organization that provides education, advocacy, and practice improvement support to practicing internists. We are part of the umbrella of organized medicine, and I believe that our support for changes to reward quality improvement are shared by many physicians and many other organizations within medicine.

Steven Pearlstein: That's useful clarification. So let's end on that positive note. This has been a great discussion. I'll be away next week. See you later in the month.

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